FAQs Related to NRI Taxation Rules & Regulations

When you are considered as a non-resident Indian (NRI)?

A person who does not fulfill the condition of being an Indian resident is considered to be a non-resident (NRI). You will be considered as a resident –

if you stay in India for 182 days or more in a given financial year

if you stay in India for 60 days or more and 365 days or more in immediately preceding 4 previous years.

In case you do not qualify any of the above conditions, you will be considered as an NRI.

I am an NRI and having a rental income from a flat that I own in India. I am working in US and receiving income in the form of salary in US itself. Whether I am liable to pay income tax on my salary income in India?

As an NRI, only the income you earned in India will be taxable rather than you are taxed on worldwide income. You need to pay tax on the rental income received by you from the rented flat situated in India. However, you don’t have to pay any tax on the salary income you are receiving from USA.

When should an NRI file his or her income tax return in India?

Like any other individual taxpayer, NRI must file income tax return in India if his or her gross total income from India exceeds Rs. 2.5 Lakhs in a particular financial year. The date for filing income tax return for NRI is also 31st July.

I am 65 years old NRI individual. If my gross total income is Rs. 2.8 Lakhs during a year from India, whether I am eligible to file a refund or not?

There is no tax levied on senior citizens till the exemption limit of Rs.3 Lakhs but in case of NRI, you need to file tax return if your income exceeds 2.5 Lakhs.

Should taxes be deducted when payments are being made to NRIs?

There are specific transactions related to rent, technical fees or professional fees made to an NRI have to go through TDS deduction. Individual needs to apply for TAN for himself in order to deduct tax at source. Two other forms also need to be filed are as follows –

a. Form 15CA (to be filed by the person making the payment) and

b. Form 15CB (to be obtained from a Chartered Accountant)

Whether an NRI is taxable on his or her income in both the countries (residence country & source country) or not? What is the role of the Double Taxation Avoidance Agreement (DTAA) here?

An NRI income is taxable in both the countries – source country and the residence country because of which NRI has to pay tax twice. Source country deducts tax as income is generated from their country whereas residence country deducts as the individual is living in that particular country.

To overcome this, India has entered into double taxation agreement (DTAAs) with various countries which help eliminate such double taxation policy and allows the taxpayer to claim credit for foreign taxes paid at the time of filing their income tax return in the home country.

I am an NRI. Is there any need to pay capital gains tax to the government in case I sell my owned flat in India?

Yes, you will be liable to pay capital gains tax at the time you sell your owned flat in India. The taxes are deducted on the basis of gains you made from selling the property. The tax deduction rate for a long term asset would be 20% whereas in case of short term asset, tax is deducted at source.

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